CHAPTER 4
Employer Organisations
‘The stronger man’s argument is always the best.’
Jean De La Fontaine
LEARNING OBJECTIVES
After reading this chapter you should be able to:
•
understand the role of employer organisations in industrial relations
•
look at the relationship between employer organisations and other players in the industrial
relations framework
•
briefly review the history of these associations
•
review the theories attempting to explain the emergence and development of employer
associations
•
discuss bargaining structures and provide examples of how these arise
•
briefly provide an Asian perspective on employer associations.
INTRODUCTION
Employer associations are the natural counterpart of trade unions in a capitalist economy. While trade
unions developed in response to the needs of workers, employers have also recognised the value of
joining together for support and protection. This chapter examines these organisations. First, we look
at the history of Australian employer associations. We then review contemporary developments: the
structure, strategies and objectives of business organisations in Australia, and their role in the conduct
of industrial relations. However, it needs to be said from the outset that information and literature on
these organisations are sparse. This is partly because employer associations have not traditionally been
very prominent players in industrial relations. But it is also because their activities are rarely viewed in
the same way that trade union activities are seen, as a direct challenge to society’s economic and
power status quo. This chapter concludes by reviewing employer associations in the selected Asian
countries, including China.
DEFINITION OF EMPLOYER ASSOCIATIONS
The term ‘employer association’ is applied to business organisations that have a specific interest in
industrial relations (see Plowman 1989; Bell 1994). It is this specific industrial relations interest which
distinguishes these ‘associations’ from other organisations that represent employers across a range of
other interests. This distinction can be set out in the following way:
1.
‘Employer organisations’ undertake a variety of functions when seeking to serve their
membership. These functions can include informing and educating members on issues pertinent
to the industry they operate in, gathering statistical information, monitoring industry
developments, running trade conferences, publishing trade journals, lobbying politicians,
conducting publicity campaigns or some combinations of these.
2.
‘Employer associations’ also engage in these essentially political and commercial activities, but
in addition are actively involved on behalf of members in processes that determine employee
conditions (Plowman 1982). This may involve:
• giving employer support to government policies on labour and social issues in return for
policies that protect or advance business interests in particular industries
• providing employer representation at industrial tribunals on wages and working conditions
• facilitating collective action amongst members as a means of resisting trade union demands
• some other action conducive to employers in the balance of power between labour and capital.
Itisthisinvolvementinemployeerelationsbyemployerassociationsthatweareessentiallyconcernedwithhere.Unfortunately,thisdistinctionsometimesbecomes
blurred,as someemployerorganisations occasionally engage in industrial relations activities, for example during times of crisis. In
addition, some organisations indirectly influence industrial relations when, for instance, they lobby governments for changes
in business practices which have profound ramifications for working conditions of employees. An example was the push for
extended shopping hours in Victoria by some employer groups. This led to the need to formulate
appropriate pay rates and conditions for workers expected to work outside the normal hours.
HISTORY OF EMPLOYER ASSOCIATIONS
In the last half of the 19th Century, the growth of trade union influence and the threat of compulsory
unionism were of great concern to employers. By 1885, the Trades and Labour Councils had become
very effective at focussing the combined strength of unions against less organised employers. This
focus and coordination allowed unions to exert more pressure on employers to implement compulsory
unionism in their establishments. These conditions encouraged adversarial workplace relations and eventually led
employers to seek a similar focussed and coordinated approach to the industrial environment.
A dispute between employers and unions over an eight-hour workday led to the formation by
employers of the Iron Trades Employers Association in 1873 (Dabscheck and Niland 1982, 172). This
body has been more commonly known as the Metal Trades Industry Association (MTIA) until it
merged with the Australian Chamber of Manufacturers (ACM) in 1998 to form the Australian
Industry Group (AIG). It is now an extremely powerful national lobbyist for employers.
In Victoria, in November 1884, the Operative Bootmakers’ Union members were in dispute with
employers over an industry wide log of claims. This resulted in a thirteen-week stoppage and a high
degree of animosity between employers and the union. As a consequence of this action, in 1885
employers formed the Victorian Employers Union, the precursor of the Victorian Employers
Federation (VEF), (Thomas 1985, 1-2).
As these adversarial conditions continued and worsened in the 1890s depression, other employer
unions were established. With compulsory arbitration and the establishment of wages boards and
tribunals, unions acquired legal status and the employers’ dominance of the employment relationship
was challenged. For employers, these developments served to reinforce the collective benefits of
employer unions (Wright 1995, 29-30).
While many employer unions have survived as can be seen from the examples above, many more
disappeared either through merger or by disbandment. The disbandment of employer unions occurred
predominantly in situations where such associations were formed in response to a specific strike or
threat. Once these issues were resolved, the need for the association disappeared and the association
was disbanded.
The role and purpose of early employer associations were quite specific. They provided a united
retaliatory mechanism against union initiatives. Wright (1995, 29) also points out that while employer
coordination was a response to the growth of unionism in many industries, it was also greatly
concerned with trade issues and tariff protection. Employer associations were also subject to a great
deal of disunity, as members vied to have their individual needs satisified at the expense of the
collective.
The period between 1901 to 1913 saw the second highest growth rate of population that Australia
has experienced (Coppell 1994, 90). This in turn stimulated strong growth in industry, employment
and the economy. This growth intensified the density and penetration of trade unions, and led to the
development of permanent employer associations closely resembling those we have today.
As the influence of employer associations grew throughout the 20th Century, so the dependence that
employers placed on them also grew. By the end of the century, with the increasing complexity of the
business environment and the industrial relations system, their role and function were expanding. A
wider range of employer associations was established. These included:
•
‘umbrella associations’ such as the VEF and the former ACM, whose members come from a
variety of industries.
•
‘industry associations’ such as the former MTIA and the Oil Industry Industrial Committee,
whose members come from a specific industry. Some of these organisations are sufficiently
large to be autonomous, providing member services with no support from other
associations. Others are part-time operations, depending on other associations for assistance.
•
‘peak employer associations’ such as the Australian Chamber of Commerce and Industry
(ACCI) and the Business Council of Australia. The emergence and development of these
peak associations has to some degree mirrored the evolution of the ACTU and the Trades
and Labour Councils.
All of these associations have provided employers with greater coordination, unity and
dissemination of information. They have also allowed more effective lobbying of governments on
policy issues.
THE DEVELOPMENT OF PEAK ASSOCIATIONS
There is a variety of definitions available for employer associations. In London in 1968, Lord
Donovan (Donovan 1971 Report, 7-8) stated that employer associations undertake a number of
activities such as the negotiation (directly or indirectly) of wages and working conditions. However,
he went on to distinguish other associations that engage in such things as the standardisation of
products and trading contracts. This introduces a differentiation based on industrial relations and other
functions.
In Australia too, employers associations can be grouped into those with a main focus on industrial
relations, and those whose main purpose is to act as industry associations, formed to protect common
trade interests. The latter type of organisation has little or no industrial relations function, but typically
acts as a pressure group, for example lobbying governments on issues such as protection or free trade.
There is also the ‘hybrid’ association that may engage in both types of activities.
It is useful to understand the origin of employer associations because as Dufty and Fells (1989, 82)
contend, these associations went through a learning experience when they were formed. Responding to the prevailing
conditions of their time, they were originally concerned more with trade and tariff protection and specific industrial
conflicts rather than longer term industrial relations issues (Wright 1995, 29).
Plowman (1992, 225-226) contends that employer associations are essentially reactive in nature
and that they engage in ‘Reactive activity’ in order to maintain power and bargaining structures. He
argues that the role and purpose of associations have changed very little from their inception.
Although this view has been challenged by Barry (1995, 543-545), it is still a major theme within
industrial relations literature.
Despite Plowman’s argument, the original employer associations that were formed around regional,
state, trade and occupational demands have evolved. During the 1920s the first Peak associations
started to appear. As Carney (1988, 76-77) discusses, these were committees with member drawn
from umbrella organisations such as the Australian Council of Employers Federation (ACEF), a parttime organisation, the Associated Chambers of Manufacturers of Australia and others. These
committees met mainly to decide a united approach to national wage claims and then disbanded later.
It was not until 1977 that one major ‘Peak’ association emerged, the Confederation of Australian
Industry (CAI). The CAI was formed through the amalgamation of ACEF and the Associated
Chambers of Manufacturers of Australia. This association was designed to unite all other umbrella
organisations and their member employers. However, the CAI itself amalgamated with the Australian
Chamber of Commerce in 1992 to become the Australian Chamber of Commerce and Industry
(ACCI) an even stronger peak employer association (Alexander and Lewer 1998, 98).
The other main peak employer association is the Business Council of Australia (BCA). This
association was formed in 1983 when the Business Round Table joined the Australian Industries
Development Association. It brings together over 100 chief executives from the nation’s leading
organisations and promotes discussion and research on major issues affecting the business community
(BCA 1994, 4).
THEORIES CONCERNING EMPLOYER ASSOCIATIONS
A number of theories have been formed to explain the emergence and development of employer
associations. Whilst we will examine the most recent ideas, including Plowman’s Reactivity theory
mentioned above, several of the early explanations also deserve scrutiny.
John Commons
Commons (1909) undertook research in the US and produced a work entitled, ‘American Shoemakers,
1648-1895’. Commons argued that as improved transportation and communication services became
available, employer and employee functions became separated. This allowed expansion of the
marketplace and nurtured the formation of both unions and employer associations for mutual
protection and greater penetration of the market. The Commons thesis saw market growth and the
increasing inequality between employers and employees as instrumental in the development unions
and associations to protect respective collective interests.
Hoxie
In the 1920s in the US, R.F Hoxie put forward an opposing power thesis to explain why unions and
employer associations form and develop. Hoxie argued that employers and employees use a number of
mechanisms to ensure that each has either a comparable or superior organisation to the other. While
Hoxie saw both these parties as critical players in industrial relations, he emphasised that each has
opposing interests to the other. Both parties then engage in activities to offset the power developed by
the other. Each strives to develop more sophisticated structures and coordination than the other. The
objective is to maximise the interests of one group over the other.
In Australia, the spread and threat of unionism together with the role played by the Trades and
Labour Councils were central reasons for the emergence of employer associations. In support of
Hoxie’s view, the ACTU emerged as the peak union body in 1927 following attempts by employers to
establish peak associations of their own earlier that decade. This competitive copying of organisation
follows Hoxie’s model well, although it does not address the issue raised by Wright (1995, 29), that
employers formed organisations to deal with issues of trade and tariff protection as well the industrial
relations issues.
McCaffree
Again in the US, early in the 1960s, K.M McCaffree developed the thesis that employer associations
were created in response to the dynamic environment in which they operate. McCaffree argued that
employer needs, such as a means to achieving greater dominance in the employment relationship,
played a less important role in the development of employer associations than was previously
believed. Instead, he argued, the need to establish such associations was imposed upon employers by
their environment. McCaffree argued that the establishment and development of employer
associations could be explained by looking at the growth in complexity and sophistication of the
political, economic and market conditions. He conceded that the growth of unionism was also an
environmental influence that could pressure employers into a state of consolidation. However, he
emphasised the external environment of organisations and argued that it was here that the major
factors influencing employers occurred.
In the early Australian context, the gold rush brought an influx of migrants to the established cities.
These people brought with them professions, skills and trades that encouraged the growth of new
industries. We can apply McCaffree’s thesis to this early Australian period by showing how the
growth of population and new industries encouraged the division of labour and lead to the spread of
unionism. As a more complex market developed, unions consolidated into the Trade Councils and
employment legislation was enacted. With the nature of work and the employment contract changed,
employers were pressured to establish associations to gain protection from environmental influences
and to provide a means to deal more effectively with them.
Jackson and Sisson
In the mid 1970s, Jackson and Sisson produced three models which they believed explained the
emergence and development of employer associations (Plowman 1986). These models, built upon
earlier research, attempted to both explain a wider range of issues and integrate them into one
cohesive thesis. Jackson and Sisson also argued that if their three models did not largely explain the
origin and development of employer associations, then variants of the models certainly would.
The first model was the defensive model. They contended that employer associations originated as
a defense mechanism that would protect them from the threat that united and coordinated unions
posed. In this instance they argued that the development of union structures was an aggressive action
and that employers formed similar structures in order to offset the power and coordination achieved by
the union movement.
In the Australian context this could explain the emergence of employer associations, however once
established there would be little need to develop further. If the model is varied to the extent that one
party is aggressive (unions) while the other is defensive then we can assume a continuing spiral where
every new aggressive action is met by an opposing defensive counter-action. This would certainly
support the view that employers and their associations are reactive but it would not necessarily explain
employer initiatives or joint consultative processes.
An example of employer initiatives through their associations can be seen in the establishment of
the Employee Relations Study Commission by the Business Council of Australia in 1987. The purpose
of this commission was to seek methods of improving the ways in which people work together by
changes to the existing industrial relations system (BCA 1994, 28). Other examples are the BCA’s
Australia 2010 document or the Joint Statement on Participative Practices that was made by the CAI
and the ACTU in 1988. The sub title of this document was ‘A Cooperative Approach to Improving
Efficiency and Productivity in Australian Industry’.
The second model proposed by Jackson and Sisson was th e procedural (political)
model. This model builds on the defensive model. Once employers and unions have
constructed their respective representative bodies they are able to formally recognise
each other. The employer associations acknowledge the role and purpose of the union
movement while the latter recognises the employers’ role and purpose, and their right
to manage within their organisations. This mutual recognition then allows for the
construction of an agreed framework within which bargaining and negotiation can take
place.
In the Australian context, this second model may help to explain the continuing role of both union
and employer associations. The emergence of the chambers of commerce and employer federations as
well as trade councils allowed a framework to be constructed that allowed the two key parties,
employers and employees, to air and settle their grievances. This is in keeping with Dunlop’s model
and an extension to his web of rules (Dunlop 1977) (see Chapter 1). Also, as Kerr, Dunlop, Harbison
and Myers (1964) argued, conflict is necessarily associated with employment as both employers and
employees seek security through opposing means and often at the expense of each other. The second
model of Jackson and Sisson could explain how these continually arising differences are settled so that
they do not totally disrupt industry to the detriment of both parties.
The third model is the market (economic) model and this also builds upon the previous model. This
model argues that employers organise along product lines, frequently colluding to reduce market
wages. However, although this model may apply to highly competitive industries, it does not apply to
less competitive and more labour intensive industries.
The three models put forward by Jackson and Sisson are probably better described as a single threepart model than three independent models. However, they do provide a useful background for
explaining how employer associations form and why they continue to evolve and develop. It is yet to
be seen if these models will remain applicable to Australia as we further develop Workplace
Agreements and enterprise bargaining. They may also be challenged by the Howard Governments’
new industrial reforms in the Work Choices Act, 2005 which will see further changes to the roles of
both trade unions and employer associations (see Chapter 7)..
Streeck
In West Germany in the early 1980s, W.Streeck’s research on employer associations also found that
the environment played an important role in determining their role and nature. However, Streeck
found that role of the ‘State’ or government was an important influence in determining the issues dealt
with by employer associations. Streeck argued that even though associations may have begun as
private, state-free organisations, they are used by the state for collective discipline and responsibility.
Dunlop
John Dunlop (1977, 119-128) also noted that the role of governments in the industrial relations system
has increased. In Australia the three levels of government (federal, state and local) are significant
employers in their own right. Therefore they not only create the political and legal framework in
which industrial actors operate, but they also decide industrial relations policies as employers. This
‘leading by example’ approach can encourage both unions and employers to adopt similar policies.
The Federal Government in particular has created mechanisms that not only allow involvement by
various parties, but actively encouraged participation.
The National Wage Cases, the various Accords, and the Workplace Relations Act 1996 have all
created the need for involvement and research by all parties affected. Similarly, in 1996 when the
Victorian Government handed back responsibility for Industrial Relations to the Federal Government,
this necessitated greater involvement by all the parties affected.
To a large extent in these and other examples, government has set the agenda for all parties, not just
employer associations. Carney (1988, 77-78) discusses the role of employer associations as lobby
groups trying to influence government policy and this supports Streeck’s thesis that the ‘State’ can
alter the role and nature of such associations. However, this does not mean that the role of employees
and their unions, or employers and their associations, are completely responsive to and directed by
government policy. On the contrary, it is more often the initiatives of these parties that influence
government policy. Nevertheless, Streeck rightly identified the role of government as an active player
in an industrial relations system.
Windmuller
In the early 1980s, Windmuller argued that there were five objectives that create the need for
employers to band together for the benefit of their collective interests. He believed that one or more of
these objectives could influence employers to seek such communal support. He also argued that while
the need to achieve these objectives continues, there is a continuing need for the employer association.
Windmuller’s objectives can therefore be seen not only as reasons for the establishment of employer
associations, but also grounds for their continued existence.
The five objectives identified by Windmuller (1984) are set out in Table 4.1. In identifying these
objectives Windmuller noted that it is sometimes difficult to separate the trade and industrial relations
functions of employer associations, because they are often so interlinked that they are inseparable. It is the last three
objectives that are of interest here as they relate specifically to the industrial relations system.
Table 4.1 Windmuller’s five objectives of employers forming employer organisations
Objectives of employers forming collective associations to represent their interests
1.
2.
3.
4.
5.
To regulate mutually agreed issues of trade and competition
To obtain legislative protection in trade, especially regarding imported goods
To present a united front against trade unions
To provide services in labour and personnel management
To lobby for relevant social and labour legislation
Source: Based on material from Windmuller, J. ‘Employers Associations in Comparative Perspective:
Organisation, Structure, Administration.’ In Employers Associations and Industrial Relations:
A Comparative Study.Edited by J.P. Windmuller and A. Gladstone. Clarendon Press, Oxford, 1984
The third objective is quite specific, a practical approach for employers to deal with trade unions.
Without an employer association, unions can effectively divide and defeat employers. In trying to
obtain the best wages and conditions for their members, unions generally can only push toward the
industry benchmarks with larger well-informed employers. However, smaller employers can be
coerced by industrial action to engage in over award payments, setting a useful precedent. If one
employer pays certain wages and provides certain conditions (e.g. a 36 hour week), then unions can
use this as the basis for disputes with other employers to gain similar benefits.
However, if employers form an employer association, they not only negotiate centrally, but can
ensure that all members are aware of the negotiated benefits. It then becomes much more difficult for
individual employers to be served with a log of claims in these areas. The contribution of relevant
information to the association, and the dissemination of information to members, provide employers
with a powerful communication tool. It allows a uniform flow of information about existing and
potential industrial issues, and permits a united front.
Windmuller’s fourth objective seeks to establish an association that can provide accurate
information and advice. While many large organisations employ specialist staff to deal with human
resource and industrial relations issues, the overwhelming number of smaller organisations in
Australia do not. In addition, because the industrial relations system in Australia is rapidly and continually
changing, even large organisations with specialist staff still need advice. The employer association is
able to provide a range of fee for service activities that meet the needs of its members. These services
generally include expertise in the interpretation of award clauses and support in the construction and
wording of workplace agreements. When, for example, the Victorian State Government handed over
its responsibility for industrial relations to the Federal Government, many Victorian employers, who
were still party to state awards, experienced a great deal of concern and confusion. Many sought
advice from their employer association. It is clear, therefore, that the provision of such services is
critical to employer associations.
The fifth objective is concerned with employers having input into the construction of legislation
that will impact upon them. Such legislation could involve direct changes to industrial relations
legislation or it could also concern legislation that could indirectly result in industrial strife. For
example, the Labor Government’s Button plan, which was designed to improve efficiency within the
vehicle industry, included the gradual reduction of industry protection through government import
tariffs. This eventually saw Nissan close its major operations and other vehicle manufacturers were
forced into retrenchments and redundancies.
Yet while issues such as tariff protection are a common interest among employers and employer
associations, these same issues can often cause friction when they bring out diverging opinions and
interests. This friction can occur within employer associations or between them. However, the result is
often a fragmented approach that inhibits these organisations from presenting an effective united
stance. This internal conflict can therefore weaken the influence of employer associations
significantly.
In Australia there has also been a growing awareness of the broader role that trade unions and
employers can have within the community. There is also a greater awareness of the inter-relatedness
of industrial issues with social, economic, political and legal issues. As a result both trade unions and
the larger peak employer associations are now concerning themselves with a wider range of issues and
acting as lobbyists to the governments on behalf of their members. The governments have responded
to this approach by adopting a more consultative approach themselves and gaining views on important
issues from a much wider section of the community. This has allowed employer associations to argue
that they, like their union counterparts, do indeed represent a large section of the community and
therefore should be consulted.
Plowman’s Reactivity Thesis
David Plowman who has completed a great deal of research on employer associations in Australia,
developed his ‘reactivity’ thesis to explain the origin and development of employer associations.
Plowman believes that the introduction of compulsory arbitration to our nation brought forward the
response from employers to band together in associations. Within this framework, employer
associations have continued to be predominantly reactive to their environment, as disunity amongst
these associations has stifled any proactive initiatives. Plowman argues that several causes are to
blame for this reactivity. The multiple award situation that has dominated much of Australia’s
industrial history has meant that employers have in many instances had to deal with a multitude of
unions. Plowman (1992) notes that one company was respondent to over 120 awards at both state and
federal level. This, he argues, is one reason why trade unions are proactive and employer associations
are reactive.
Another reason he gives is that of the nature of the award-ambit. While employers have moved to
contain costs, unions have moved to increase the benefits available to their members. Ambit and the
establishment of minimum standards have allowed trade unions the initiative in negotiating for such
benefits, while employer associations have waited upon the union movement to utilise this initiative
and then respond to it.
The membership of employer associations also limits their ability to respond proactively. Plowman
notes that membership of associations consists of small, medium and large organisations with varying
degrees of capacity to pay and provide working conditions. In order to overcome this, associations use
the lowest common denominator principle, which in turn severely limits the responsiveness of the
associations. He also notes that formulating proactive industry-based policies becomes even more
difficult for larger and peak associations.
Thornthwaite and Sheldon (1996) and Barry (1995) have recently put forward a number of
alternatives to those embraced by Plowman. The former suggest alternative definitions of the terms
‘reactivity’ and ‘proactivity’. They used the former MTIA as an example to develop their view. This
association, they argued, rapidly changed in the 1990s as society moved away from traditional
industrial relations to non-union collective bargaining, enterprise bargaining and workplace
agreements.
Barry (1995, 545-549) attacks the Reactivity thesis on the grounds that the way in
which employer associations have emerged and developed in Australia is not unique to this nation.
He also does not believe that the thesis explains the development of permanent pre arbitral associations such as the VEF.
It is an interesting co-incidence that the theories put forward to explain the emergence and
development of employer associations also resemble theories put forward to explain the emergence
and development of trade unions (see, Tannenbaum 1951; Beatrice and Sidney Webb 1896; Commons
1909).
While the theories reviewed in this section provide an historical perspective of the emergence and
early development of employer associations, the late 1990s will offer new challenges for researchers.
Employer associations have been given new opportunities without some of the restraints they were
previously under. The necessity for a change in their role, function, structure and the services that they
provide is clearly shown by the merger of the MTIA and the ACM to form the Australian Industry
Group (AIG) (discussed below).
STRUCTURE
The structure of employer associations varies and is dependent upon the number of employer
members, the range of services they provide and the type of association they are. Employer
associations also provide managers of member organisations with two opportunities. First, they
represent the individual and collective interests of member organisations at various levels such as
regional, state and federal. This caters to the specific needs of managers of member organisations.
Second, the input of members allows managers of member organisations to influence the development
of association policies to reflect management philosophy. A predominance of either an individualist or
collectivist style management amongst members will therefore show itself through association policies
with a tendency towards a unitarist or pluralist stance respectively. Such differences can also lead to
internal and inter-association dissension.
Industry Associations
Industry Associations refer to those employer associations that represent a single industry. This would
include the AIG, the Oil Industry Industrial Committee, the Australian Paint Manufacturers’
Federation Inc, the Retailers Council of Australia, the Housing Industry Association and many others.
These associations are national and draw upon members in several or all states. They have a specific
focus on one or more specific industries and membership comes from that sector, although in 1995,
the MTIA described itself as ‘Australia’s Manufacturing, Engineering and Construction Industry
Association’.
The MTIA and AIG
The MTIA in 1995 had a membership, including affiliates of 6622. These organisations were engaged
in those areas listed above. The National Office was located in Canberra while it had Branch Offices
in New South Wales, Victoria, Queensland and affiliate offices in Adelaide and Perth. It also had an
office in Jakarta. The MTIA was an autonomous association, meaning that it was big, independent and
not reliant on support from other associations to provide its member services. Instead, the MTIA
provided management services to a number of smaller associations including the Australian
Constructors Association (ACA), the Association of Australian Aerospace Industries (AAAI) and the
Office Equipment Industry Association (OEIA).
A group of elected members formed the National Executive of the MTIA. The office bearers
included a National President, a Deputy National President, National Vice Presidents, the National
Secretary-Treasurer and, the Immediate Past National President. Assisting the office bearers were 14
elected members, a small number of alternate members and representatives from the Affiliated
Member associations and the National Construction Council (MTIA Annual Report 1995). Elections
were held annually. The National Executive members were elected by the state branches and affiliates
while the branches elected their own office bearers from representatives of their member
organisations. Regular elections were held for the branch office bearers and national committee
representatives. This structure ensured that the three state branches, the National Construction Council
and affiliates had representation on the National Executive. It also ensured that there was full input
into the special groups and task forces at the national level.
A full time Chief Executive oversaw the permanent staff of the association and there was a Director
for each of the three main state offices. Other full time staff were responsible for the internal running
of the association and the provision of services. These roles included the following areas of
responsibility: Finance and Administration, Trade and Commercial Services, Public Affairs and,
Industrial Relations.
While Industrial Relations was a major area of interest for the MTIA it also undertook research and
reports into a number of other areas, including its role as a shareholder in the Superannuation Trust of
Australia. Other areas included International Trade Initiatives, Environmental Issues, Training and
Development, Occupational Health and Safety as well as the development of policies into these and
other areas affecting members. At the national level there were also specialist groups such as the
National Personnel and Industrial Relations Group and the MTIA National Business Strategy Group.
The MTIA not only addressed issues of concern to members but it also lobbied the government of
their behalf and attempted to influence policies accordingly. The scope of activities varied on different
issues due to make up, size and needs of its member organisations.
On 1 July 1998, the MTIA and the Australian Chamber of Manufacturers (ACM) formally merged
to form a single industry association known as the Australian Industry Group (AIG). This new
Industry Association boasts a membership of over 11,500 companies producing more than $100
billion in output. These member companies employ over 1 million people and produce exports worth
more than $25 billion. Specific segments such as the Defence Industry take a high profile within the
AIG. Nevertheless, an interesting feature of its activities centres on its recognition of the need for
Australian industry to participate and be represented fully in the global economy.
The AIG represents employers from a range of industries but predominantly from
the ‘Industrial’ sector. The structure has remained similar to that of the MTIA in that
there are national, state, regional and branch Councils comprised of elected members
(mostly Chief Executive Office rs of member organisations) under the guidance of a
National Executive. The combined resources of both the MTIA and the ACM now
provide members with a wider range of services. AIG me mber services include:
•
representation in public policy issues; lobbying; surveys and research; communications; and
publications
•
trade and international services
•
industrial/employee relations issues; enterprise bargaining; contracts of employment; unfair
dismissals; equal opportunity; discrimination; disputes avoidance and resolution
•
environment, energy and safety including workers compensation and compliance
•
training technical skills; group training; management training; training policy and programs
•
workforce strategies; human resource consulting/outsourcing
•
telephone advice network
•
regional services; association management; and industry sector programs.
Services provided by the membership subscription include information, assistance and advice on:
•
contract of employment issues
•
awards (wage rates and employment conditions)
•
tribunal representation
•
employee/management negotiations
•
award simplification
•
dispute resolution
•
termination of employment, including redundancy
•
workplace agreements (negotiation, drafting, representation)
•
recruitment, selection, induction
•
contracting out.
Source for the AIG membership information: Herbert 1999, AIG web page
The AIG also provides a range of chargeable services to members and non-members.
The merger of the ACM and the MTIA is consistent with survey findings reported by Mortimer and
Still (1999). In this 1998 survey, it was reported that there were a number of employer association
mergers and that there was a trend towards fee for service activities. The survey also showed that
associations were necessarily drawing on expertise and contacts beyond their state boundaries so that
they could provide members with a wider range of services and expertise. However, the most
interesting findings were that employer associations were adopting a range of strategies to cope with
decentralisation. These included the fee for service activities, providing a wider range of services,
better marketing and sensitivity to client needs and drawing on broader levels of expertise.
Thus the merger of the ACM and the MTIA, the array of chargeable services, the broader business
and global emphasis are all roughly consistent with those results reported by Mortimer and Still. The
AIG has therefore resulted from a recognition of changing Industrial Relations practices in Australia
and the need to realign structure, services and activities with a decentralised market.
PEAK ASSOCIATIONS
The Business Council of Australia (BCA) and the Australian Chamber of Commerce and Industry
(ACCI) are examples of two peak associations in Australia however their respective memberships and
structures are quite different. Both associations are reasonably new in comparison to the ACTU. Both
are considered by industry and the Trade Union movement to be peak bodies and both have been
highly influential in industrial relations.
ACCI
ACCI came into being in 1992 following the merger of two other employer associations and by 1994
its Annual Report stated that it was representative of over 300,000 organisations. It also stated that its
membership included all state and territory-based chambers, employer and national industry
associations. (ACCI, Annual Report, 1994). The membership is composed of other smaller
associations across a range of industries, rather than individual corporate members, and so it
represents these associations on a wide scope of issues at the national level.
Hamilton (1993, 88-90) notes that there were a number of mergers between employer associations
at the state level that made the merger to form ACCI go smoothly. These mergers occurred in Western
Australia where the Confederation and State Chamber of Commerce merged to form the Chamber of
Commerce and Industry of Western Australia. Similar mergers had already occurred in Victoria in
1991 and in South Australia in 1972.
Acci provides the following services:
 representation and advocavy to government
 business representation on a range of Statutory and business boards, committees and other
consultative for a
 representation in national and international for a including the Australian Industrial Relations
Commission and the International Labour Organisation
 research and policy development on national business issues
 business surveys
 information products
Source: Curtis, 2002, AIG web page
MacIntosh (1993, 60) states that ACCI was a lot more critical of government reform that its
predecessors and that a subtle shift in policy occurred after its formation. ACCI supported the
replacement of arbitration with individual and collective bargaining at the enterprise level. The
previous CAI had wanted to retain the arbitration system as well as introduce a greater emphasis on
enterprise bargaining. MacIntosh argued that the change in policy was a reflection of the different
membership make up, with a greater emphasis on the needs of small business.
In discussing the formation of ACCI, Hamilton (1993, 90) also points out that the association
represents the peak associations at the regional and state levels and most of the national industry
associations. This makes it the only national peak council of employer associations in Australia.
BCA
The Business Council of Australia was formed in 1983 but unlike ACCI, it does not have smaller
associations as the base of its membership. By the end of 2002 BCA has almost 100 large Australian
Organisations as its members and the Chief Executives of these organisations form the Council and its
Board. At that time it also had an annual budget of $5 million. The Board consists of a President and
three Vice Presidents. There are a number of Council Task Forces of CEO’s focusing on Council
priorities such as:

Taxation

Regulatory and reform

Education and training

Information economy

Greenhouse
These Task Forces then investigate and report on these and related topics. However as new
priorities emerge for the BCA then additional task forces will be created. Executives, other than the
CEO’s, from the companies represented on the council also staff these Task Forces.
Both ACCI and BCA are supported by full time staff. The BCA is supported by a Secretariat that is
headed by a Chief Executive Officer. Other positions within the secretariat include an Economic
Adviser, Directors for Policy Analysis and Research, a Director of Communications, the General
Manager, Executive Assistants and support staff.
In discussing national employer coordination and structure, Plowman (1991, 146) identified a
number of structural models including the following:
1. the mutual defence model
2. the federation model
3. the alliance model
4. the secretariat model
5. the confederation model.
These were models of national employer coordination and each could be located at different stages of history within
the development of associations in Australia. The earliest model, the mutual defence model emerged
in New South Wales in 1890 during the Maritime Strike when 700 employers decided that it was in
their interests to form the Employers Defence Association of Australasia. It was explicitly stated in the
organisation’s objectives that it was for mutual defence and protection (Plowman 1991, 147).
The federation model saw the joining together of associations to form an employer federation at
each state. These state federations then joined to become a confederation at the national level. This
allowed member associations to concentrate on their respective areas of interest while joining together
at a state level to determine policies and action plans on industrial relations issues that affected them
all. However, the diverse range of interests represented, created difficulties of coordination while still
allowing for member autonomy.
The alliance model was an attempt to improve on the federation model. Plowman (1991, 152-156)
identified the alliance model period from 1917 to 1958 and noted that among the many alliances
formed, there were a number of similarities. The similarities were that the alliances were loose-knit
and voluntary; employed no full time staff; were restricted to specific roles such as test cases; and that
they brought together a large range of state and national employer associations. However once the
specific issues were resolved these alliances disbanded.
The secretariat model was describes efforts to achieve coordination on a more permanent basis and
first emerged in the 1950s following concerns about the alliance model. The National Employers
Association structure followed this model. However, factional disunity lead to its demise and the
consequent formation of the confederation model.
The confederation model was an attempt to overcome the difficulties experienced in the formation
of previous structures. Plowman (1991, 161) notes that there were at least three variants of this model.
They tried to bring into being a confederation that confined its activities to industrial relations and
trade related activities.
Plowman does note that these five models were practical given the circumstances of the time and
were only superseded as the conditions and needs of employers altered. ACCI can be described as a
confederation structure as it brings together the major state associations and provides a permanent
form of national representation on issues affecting its members.
The BCA, on the other hand is an authoritative body that relies on the power of its
member organisations, which are some of the largest organisations in Australia. It can
also become embroiled in industrial relations by initiating research such as that
undertaken by its Employee Relations Study Commission. The third r eport of this
committee was released in 1993, was based around McKinsey’s new management
model and was supported by Fred Hilmer (O’Brien 1994, 468 -469).
In more recent times the BCA has been criticized for attempting to address too many
issues with insufficient funding to provide meaningful outcomes. Thus while changes
in leadership have occurred many members use specialized lobbying firms and
therefore dependence on the BCA has been reduced. Also the membership has changed
with service-based organizations now accounting for almost 60% (Skotnicki, 2002).
BARGAINING STRUCTURES
Employer associations undertake a range of functions and provide a number of services to their
member organisations. These functions may be stated in the association’s charter, constitution or its
regulations. These functions may also grow out of the needs of the members or because there is an
expectation that such activities will be undertaken (Gladstone 1984, 24-43). The type and range of
member services will vary greatly and is dependent upon the size of the association, the resources
available to it, the range of employer interests covered and the needs of its members. The provision of
services with regard to industrial relations can include:
•
research on topics effecting their members
•
lobbying governments and influencing policy decisions
•
advocacy support and the representation of individual members in settlements
•
specialist advice on the interpretation of award clauses, the construction of enterprise
agreements etc.
•
advice on human resource and occupational health and safety issues
•
the provision of training and seminars for members to up-date them on important issues
such as legislative changes
• collective bargaining with the trade union movement.
The associations carry out the majority of these functions regularly. They are in constant contact
with a range of employers they become aware very quickly of the concerns of their members and any
trends that may be emerging. The larger associations also have regular contact with government
departments and union officials. They monitor closely issues raised at the AIRC. The associations have regular contact with
the majority of players comprising Dunlop’s system. They, like their union counterparts, are representative organisations.
While they have contact with the management of organisations, they have little if any contact with nonmanagement employees of their member organisations.
Following the move toward greater collective bargaining, this has become a major role of employer
associations at the regional, state and national levels. However, given the confrontational approach
they have taken towards the unions until the 1980s, mechanisms such as bargaining structures have
needed to be put in place to allow effective collective bargaining to occur. The role the associations
play as a representative has meant that they have necessarily been involved in the construction of
these bargaining structures and procedures, which are used to discuss, investigate, negotiate,
collaborate and resolve disputation.
Where a dispute can be settled between an employer and employee or union delegate, employer
associations have tended to encourage the settlement of the dispute at this level. Association officers
simply provide advice on how best to handle the situation. However, if a dispute escalates to a stage
where it involves the majority of the workforce of one or more organisations, or an industry, then the
involvement of the association would increase accordingly. Bean (1985, 73) observed that the level of
bargaining is more centralised at the national and industry-wide levels than at the enterprise and plant
levels. The more widespread the impact, the greater the involvement of employer associations as the
dispute impacts on more member organisations.
The change from conciliation and arbitration to enterprise bargaining represents a change in
bargaining structure, as well as a change from a centralised level of bargaining to a decentralised level
(Thornthwaite and Sheldon 1996, 174). It also allows for less involvement by governments and unions
and is a shift towards returning the responsibility for resolving industrial conflict to the parties
engaged in the employment relationship: the employer and employees. This also alters the role of the
employer association as well and has led to the recent rise in the number of fee for service activities
offered by associations. Nevertheless, in contradiction of Plowman’s reactivity theory, a number of
employer associations have shown strong initiative in seeking change.
Both the BCA and ACCI, key peak employer associations, have taken the initiative
as proponents of change to these different bargaining structures. Prior to the late 1980s
there was more evidence of Plowman’s reactivity theory among employer associations. They were
disorganised and there was widespread disagreement as to how the bargaining structures
should be shaped. The period prior to the Accord was characterised by decentralised
militancy (Thornthwaite and Sheldon 1996, 175). However, the emergence of the CAI
and later the BCA, saw not only national coordination of employer associations but
also a more coherent approach to the bargaining process. The recent role of ACCI in
particular and BCA has shown how important effective national employer associations can be in
influencing bargaining structures.
Another key employer association, the MTIA, was also proactive during this period. In 1986 the
association undertook a survey of its members and the outcome of this survey was a shift in policy
with regard to reforming the industry bargaining structure and a focus on bargaining at the enterprise
level. A range of initiatives to achieve these objectives was put to the metal industry unions in that
year. As the MTIA pursued its objectives for structural change, other employer associations and the
Federal Coalition in Opposition also began to push for decentralisation. However, the MTIA
considered that its members wished to retain the federal award-based framework while moving
towards enterprise bargaining. So it was in open conflict with other associations pushing for
deregulation and even greater decentralisation. In 1988 the MTIA obtained its goal, when the
introduction of the Structural Efficiency Principle allowed enterprise bargaining to be explored within
the existing confines of the AIRC.
In the 1980s, there was also a push by new right employers and their associations for change to
industrial bargaining levels and structures. A number of aggressive individual employers, supported
and encouraged by their equally determined employer associations, actively challenged the role and
rights of the Trade Union movement. These cases included Mudginberri (1985), Robe River (1986)
and the Dollar Sweets case in 1988.
Another change to the structure and levels of bargaining occurred when the Kennett Government in
Victoria, a significant employer in itself, decided to abandon state responsibility for industrial
relations in favour of Federal Government control. Exceptional as this was, the ongoing debate over
whether Australia should have both State and Federal systems or a single national industrial relations
system was unilaterally decided in favour of a single national system (at least in the private corporate
sector) by the Howard Government’s Work Choices Act 2005, which was strongly supported by
employer association. The matter is now settled following the unsuccessful High Court challenge by a
number of State Labor governments (see Chapter 7).
In summary, it is clear that at the national level there has been a substantial change in policy by
employer associations, which are now more effectively organised and more willing to take the
initiative in seeking industrial change. In fact, the combined efforts of these associations, together with
overall union agreement and political pressure, have brought about change in the structure and level of
collective bargaining. The ongoing move towards workplace agreements and enterprise bargaining
also reduces the need for state intervention, although it does lend itself to central coordination by
federal legislation. These changes mean a change to the role and services provided by employer
associations, the trade union movement, and the state and federal governments.
THE WORKPLACE RELATIONS ACT 1996
The Workplace Relations Act 1996 introduced sweeping changes to the Australian industrial relations
system and its participants. As trade unions began to react to these changes, so too did the employer
associations. The changes that were introduced included an emphasis on enterprise bargaining and a
reduction in the centralised functions of the Australian Industrial Relations Commission.
Employer associations adapted in some or all of the following ways:
•
attempting to achieve economies of scale through mergers
•
the provision of fee for service arrangements
•
the provision of services for those members affected by globalisation
•
increased competition
•
increased work based flexibility
more accessible and ‘user friendly’ structures.
These changes in the structure and activities of employer associations cannot be
seen as simply a reaction to a threat to their relevance or existence under the new Act.
Indeed, the Workplace Relations Act 1996 provides recognition of employer
associations and their ongoing role within the industrial relations system. The Objects
of the Act refer directly to employer associations: Object (f) ensures t he freedom of
employers and employees to join or not join the association of their choice; Object (g)
ensures that employer and employee associations properly represent their membership
and are accountable to them. (See also Chapter 9 for a discussion of t he Workplace
Relations Act 1996.)
•
THE WORK CHOICES ACT 2005
The Work Choices Act 2005 has recently introduced a second and even more extensive round of
changes to the Australian industrial relations system and its participants. Strongly supported by
employer associations and many employers, the new laws promise to further alter the roles and
balance of power in the workplace. The declining role of trade unions and the AIRC, and the
increasing role of enterprise bargaining and workplace agreements, promises to also put further
pressure on employer associations to adapt by providing more competitive and relevant services
to member organizations, who no longer depend on a centralized system to determine many
aspects of everyday workplace pay and conditions. (For a more detailed discussion of the Work
Choices Act 2005 and its implications, see chapters 7 and 9).
THE ASIAN PERSPECTIVE
Compared to our Asian neighbours, Australia has a rather unique form of industrial relations.
However, it is not unique within the western world. Much of our system was established in the 1800s
and was heavily influenced by the British heritage of the first European settlers. The first settlers
brought with them the foundations of our culture, which while it clashed with the indigenous culture,
was to become the dominant culture of the nation. Our industrial relations system, like our legal and
political structures, therefore closely resembles the British system. This is not the case in most Asian
countries. With regard to employer associations, Barry (1995, 543) noted that just as Australian
associations have received little attention from researchers compared to trade unions, much the same
can be said about our Asian neighbours.
Japan
Japan has a history and culture that is ancient in comparison to that of Australia. However, the
devastation of World War 11 saw the American military occupation government attempt to eradicate
political groups, including trade unions. In order to suppress these possibly communist organisations,
the occupation government encouraged the growth and development of enterprise-based unions which
are now a feature of modern Japan (Deery and Mitchell 1993, 6). As a result, enterprise unions
negotiate with the management of individual enterprises, rather than seeking wider forms of collective
bargaining such as industry or national bargaining. The level and structure of bargaining is therefore
somewhat different to Australia and the role of employer associations is correspondingly different.
There is nevertheless a bargaining role for employer associations in Japan. This is because the
enterprise unions are linked together and do join up for the annual ‘Spring Offensive’ (or ‘Shunto’) in
which the Japanese Trade Union Confederation (‘Rengo’) negotiates an annual percentage increase in
the wages of members. The counterpart of the Rengo is the ‘Nikkeiren’ or the Japanese Federation of
Employer Associations. While negotiations take place between these bodies first, they are both
severely restricted by enterprise bargaining. They tend to negotiate only the procedures and policies. It
is the enterprise unions that negotiate directly with their individual enterprises for the minimum wage
and conditions, so the impact of the national campaign is minimal. Similarly, the close working
relationship between management and union members at the enterprise level in effect means that most
negotiation on wider issues also takes place here. It is interesting to note that it is common for the
unions to be the active pacesetters for such negotiations and for the employer associations to
undertake a more reactive role.
Singapore
The tripartite relationship between the government, employers and unions in Singapore is very close.
The Secretary General of the union peak body the National Trade Union Congress (NTUC) is a senior
minister in the ruling government. The focus of the government is on continual economic
improvement, with industrial relations as a high priority. The government therefore takes an active
and controlling role. With government control and a strong tripartite industrial system, bargaining
structures and levels are set. While employer associations still represent the interests of their members,
the government consults publicly and regularly with both the employer associations and the NTUC.
The most important of Singapore’s tripartite bodies is the National Wages Council (NWC), which
comprises the NTUC, the government and employer associations. Among the largest associations are
the Singapore National Employers Federation (SNEF), which represents over 900 local and
international employers, and the Singapore Manufacturers Association. There are only five registered
employer associations in Singapore representing over 1000 organisations (Leggett 1994, 100).
Collective bargaining is not restricted to the NWC. Employer associations and unions are free to
negotiate outside this and other government advisory bodies. However, legislation restricts the issues
that can be discussed. The role of employer associations, therefore, is to provide research and member
services, while representing members’ interests within the tightly controlled government framework.
These limitations also apply equally to the unions and peak bodies such as the NTUC. Where disputes
arise, employer associations may provide representation and advocacy. However, the dispute will
generally be resolved by conciliation arranged through the appropriate government department.
With the role and function of employer associations and unions so openly controlled and directed by
the government, Streeck’s theory could perhaps be said to apply. (Streeck argued that the agendas of
employer associations are strongly moulded by government policy and that governments may even
draw free associations into the legal and enforcement structure.) While Streeck’s study was in West
Germany, the governments of both of these countries aim to achieve economic superiority for their
respective nations. However, the reason for the adoption of this controlled system and the methods
used to achieve it are predictably different.
Malaysia
In 1990, less than 10 per cent of the workforce in Malaysia was unionised and, due to controlling
legislation, most of these unions were small. Only the public service sector was dominated by larger
unions. Legislation provided that membership of unions, including employer associations, must be
from Malaya, Sabah or Sarawak, and that members must belong to similar occupations, trades or
industries. Ayadurai (1994, 71) points out that even union federations must conform to the second
requirement, that is to have members from specific or related occupations. Malaysian bargaining
structures and levels of bargaining are controlled by legislation. While employer associations can
provide advice, advocacy and representation, over 80 per cent of disputes are resolved through
conciliation.
The peak employer association is the Malaysian Employers’ Federation (MEF), which advises its
members on collective bargaining issues as well as representing their interests on tripartite national
bodies. The MEF was formed in 1978 with a membership comprising over 1000 individual
corporations and seven employer associations. This diversity means that it is required to provide a
wide range of membership services. After breaking away from the MEF, the Malaysian Council of
Employers’ Organisations (MCEO) was formed in 1982, comprising two employer associations.
The MEF’s union counterpart is the Malaysian Trades Union Congress (MTUC), the peak union
body, which represents over half the country’s union members. However, as its membership does not
in conform to industrial legislation, it is registered as a society. The MTUC’s power is therefore
somewhat limited and there would appear to be an imbalance of power between the two peak bodies.
However, both peak organisations may be represented in industrial forums and both are consulted by
government on relevant industrial issues. Similarly, both form part of fact-finding bodies and are able
to make submissions to the government.
The Malaysian Government has actively striven for industrial peace to further its aim of greater
economic performance, as outlined in its Industrial Master Plan and its Vision 2020. It has used its
interventionist policies and legislation to ensure compliance by both industrial parties to the national
objectives. Through tripartite bodies, voluntary collective bargaining, the maintenance of small and
fragmented unions, and its push for greater efficiency and productivity, the government has ensured
that the peak bodies have focussed on the intended agenda and are working closely together.
South Korea
As in the cases of Malaysia and Singapore, the South Korean Government has pursued an active
interventionist policy in industrial relations, although this policy may have softened in recent years.
Unlike neighbouring nations, legislation exists that guarantees collective bargaining to those
employed in the private sector, with more limited rights for those in the public domain (Young - Ki
1994, 142-143). A low level of unionism is characteristic of South Korea. The only union body
registered with and recognised by the South Korean Government is the Federation of Korean Trade
Unions (FKTU). While there are other national bodies in existence, these do not have official
recognition.
There are two types of employer association in South Korea. The first deals exclusively with labour
issues. For example, the Korean Federation of Employers’ Associations (KFEA) was formed in 1970
and draws members from the manufacturing sector (organisations employing 300 or more employees)
as well as from the banking and insurance sectors. The second type concerns itself with overall
management problems including labour related issues. For example, the Korean Chamber of
Commerce and Industry (KCCI) was founded in 1884 and membership is mandatory to all businesses
founded as a legal person. It deals with all business issues and is the official representative of all
business sectors in South Korea. Another example is the Federation of Korean Industries (FKI), which
was founded in 1961. FKI membership is dependent upon sales or budget and is open to organisations
with annual sales of 50 billion won or more (and trade associations with a budget of 1 billion won or
more). Both the KCCI and the FKI undertake research, collect data and provide members with advice
on labour related issues. Another major association is the Korean Foreign Trade Association (KFTA)
which was formed in 1946. Membership is mandatory for all organisations involved in import and
export. It promotes and protects the interests of its members.
The Labour Union Law (LUL) has an important bearing on the role and activities of employer
associations. This law requires employers to bargain collectively with a unionised workforce.
Collective bargaining takes place at three levels; the national level, the multi-employer or regional
level, and local enterprise level. Employer associations may be involved at any level to provide
advice, but are normally involved at the regional and national levels. As unions are organised along
industry lines, this is also where employer associations are usually most active. An interesting point is
that the LUL requires only the chief executive of a union or an empowered worker representative to
bargain. However, penalties on employers engaged in a prohibited practice are quite severe.
Industrial conflict can cause a great deal of disruption and in South Korea the interests of the public
are paramount. Under South Korean legislation, disputes are dealt with by the Labour Relations
Commission (LRC), which also operates at the national, local and at special levels levels. The
Commission operates on a tripartite system, which requires representation at the national level by
employers, unionists and public interest representatives. The employers and union officials nominate
their representatives for a period of three years. In effect, the South Korean Government’s tight
control of the industrial relations system through legislation, and its restrictions on unions and
workers, have also forced employer associations to accept their part in this government-dominated
tripartite system.
However Korea has undergone labour market reforms since 1998 when Labour Law changes were
introduced. Korea is therefore experiencing similar issues to other countries in the form of non standard work, employment programs and temporary work agencies. These more recent changes
impact upon the management-employee relationship and necessarily involve employer associations
(Betcherman, Dar, Luinstra, Ogawa, 2002; Park, Park, Yu, 2002)
People’s Republic of China
The entry of the People’s Republic of China into the World Trade Organisation (WTO) in 2001
had a profound impact upon a country and its economy that was already growing steadily.
However the highest levels of growth have been due to the influx of Foreign-Owned Enterprises
and the increase in the number of Non-State Owned Enterprises. There has been a decline in the
number of State-Owned Enterprises. As a consequence of the growing economy, the creation of
Special Economic Zones and market-oriented reforms China has embraced a more liberal
approach to Industrial Relations and Human Resource Management practices. (Zhu and Dowling,
2000).
The All-China Federation of Industry and Commerce (ACFIC) also known as the All-China
General Chamber of Industry and Commerce) was established in 1953 to coordinate the input of
Chinese industrialists and business leaders into government policy, under the guidance of the
Chinese Communist Party CCP). It attempts to act as a link between the non-public economy, the
central government and the CCP but also adheres closely to CCP policy. A part of its role is to
represent its members, to protect their rights and interests and provides its members with
information, management support, training…to improve operational management and operates at
the national, state and local levels. By 2002 there were 1.64 million members of ACFIC in China
and this included organizations, chambers of commerce as well as individuals. (ACFIC, 2005).
There are of course a number of Chambers of Commerce, Associations and Professional
Societies in China that deal with specific industries or sectors such as the China Chamber of
Commerce for Import and Export of Textiles and the China International Trade Society. However
Trade Associations, Guilds and Chambers of Commerce are classified in China as Intermediary
Organisations and are sub-classed as Self-Disciplined Industrial Organisations. As in the case of
Australian counterparts their role is to protect the legal rights and interests of members, provide
economic advice, monitor the market conditions, provide consultation and training. However they
also mediate market behaviors and protect members from unfair competition.
However, Trade Associations and Chambers of Commerce are classified in China as
Intermediary Organisations and are sub-classed as Self-Disciplined Industrial Organisations. This
means that they are regarded as industrial administrators and have been given authority by the
central government to determine and implement industrial development plans and reforms as well
as industrial regulation. They can conduct audits of members and appraise them accordingly.
Thus as they have been granted limited authority by the central government they become a
useful mechanism to monitor reform, employment conditions and standards in the context of
continual economic growth.
While Labour contracts and collective contracts are stipulated under the Labour Laws of the
People’s Republic of China, Chapter 111 they are enforced at the provincial level due to the
massive population of china and its geographical size. As foreign organizations locate operations
in China they bring with them new labour practices that are monitored by the relevant Chambers
of Commerce and passed onto other members.
As the emphasis in China changed from rural to industrial and in order to compete effectively with
western counties and organizations China is now seeking to reform its industries. The Chambers
of Commerce and Trade Associations become the empowered mechanisms to achieve these
reforms. Their importance to China has greatly increased and they are needed to ensure the use
of modern business, management and industrial practices. Therefore Human Resource
Management and Industrial Relations reforms via Employer Associations become the means to
successful international competition. (National Development Zones, 2003).
CONCLUSION
The Australian industrial relations system has a number of key players. This chapter has attempted to
present an overview of one of these players, the representative body of employer collectives, the
employer associations. These associations started to appear informally from the 1850s onward,
although they were transient and were generally formed to cope with a specific industrial crises, or to
promote and discuss trade and tariff related issues. Once these issues were adequately dealt with, the
associations were disbanded.
These early associations were based around regions, states, trades and occupations, with the result
that a number of diverse associations emerged. However, the introduction of compulsory arbitration
was a strong signal to employers that they needed to work toward greater unity and coordination. The
early establishment of the Trades and Labour Councils and the ACTU, as well as the political
movement of the Labor Party, were also spurs to employers to seek greater coordination.
Three types of employer associations emerged, although their functions and activities varied. Only
those with an industrial relations focus have been discussed in this chapter. The first of these is the
‘umbrella association’ that draws its membership from a range of industries such as employer
federations, chambers of commerce and industry, and chambers of manufacturers. These associations
are generally formed on a regional and state basis. The second type is the ‘industry association’. These
associations draw their membership from specific or related industries. The third employer association
discussed is the ‘peak association’. These are formed at a national level.
Several theories have been examined in an attempt to explain the emergence and continued
development of employer associations. These theories, where possible, have been reviewed in
chronological order to illustrate how the theories evolved over time. An attempt was also made to
apply these theories to the Australian system.
•
Commons argued that improved communication and transportation were factors
contributing to market expansion and hence to the need for mutual protection.
•
Hoxie argued that the opposing interests of each party saw employers and unions engage in
activities that promoted their individual cause.
•
McCaffree’s argued that growth in political and economic conditions, more sophisticated
markets and the growth of unionism were all environmental influences that necessitated
improved employer coordination and national structures.
•
Jackson and Sisson put forward three interlinked models to explain the employer association
phenomenon: the ‘defensive model’ offsetting union initiative and aggression; the
‘procedural (legal) model’ where union and employer associations were necessary for the
parties to bargain; and the ‘economic model’ which suggested collusion for mutual benefit.
•
Streeck argued that in West Germany, the state played a part in the function of associations.
•
Windmuller suggested that there were five main objectives that could explain employer
associations. These were listed in Table 4.1.
•
Plowman’s Reactivity Thesis in which employers through their disunity, poor coordination
and diverseness were basically reactive parties while the unions took the initiative.
Alternatives by Barry, Thornthwaite and Sheldon were put forward to counter or explain
Plowman thesis.
The MTIA (AIG), ACCI and the BCA were examined to give an indication of the similarities and
variations in structure, role and function. The MTIA/AIG and BCA were the primary examples used
to highlight the structures of these associations although it was noted that other structures were
common.
The bargaining structures, in which employer associations and their counterparts operate, were also
examined. Recent examples were used to show how these structures operate and how they have
changed.
The role of employer associations was examined in the five selected Asian countries: Japan,
Singapore, Malaysia, and South Korea. The differences and similarities between employer
associations in Australia and these nations were examined. In particular we have looked at their
structure; the factors that have influenced their development; the type of bargaining structures and
their role in them; and their relationship with government.
REVIEW QUESTIONS
1.
Discuss the emergence and early development of employer associations in Australia.
2.
Discuss the nature and role of the three major types of employer associations.
3.
Identify the means of interaction between the three major types of employer associations and
each of the following:
•
trade unions
•
employers
•
employees of organisations
•
state and federal governments
•
other employer associations
•
the AIRC
4.
Discuss the theories presented. Identify those that you feel adequately explain the emergence and
development of employer associations in Australia. Are there any other possible explanations?
5.
Have association’s structures continued to change?
6.
Given the nature of bargaining structures, can you identify the potential future role of employer
associations?
7.
Discuss the different structures and roles of the BCA, AIG and ACCI.
8.
Are Australian employer associations significantly different compared to those of our Asian
neighbours? Why? If not, why not?
9.
Given the changes introduced by the Work Choices Act 2005, has the role of employer
associations changed markedly? What role will it play in the future?
FURTHER READING
Deery, S. and Mitchell, R. (eds.) (1993) Labour Law and Industrial Relations in Asia. Longman
Cheshire, Melbourne.
Michael, B. (1995) ‘Employer Associations: Assessing Plowman's Reactivity Thesis.’ Journal of
Industrial Relations, vol. 37, no. 4, 543-561.
Plowman, D. (1989) ‘Countervailing power, organisational parallelism and Australian employer
associations.’ Australian Journal of Management, vol.13, no 3.
Plowman, D. (1989) Holding the Line: Compulsory Arbitration and National Employer
Coordination in Australia. Cambridge University Press, Sydney.
Plowman, D. (1992) ‘Employer Associations and Industrial Reactivity’ in Dabscheck, B., and Griffin,
G. (eds.) Contemporary Australian Industrial Relations, Longman Cheshire, Melbourne, 225-242.
Zhu, C. and Dowling, P. (2000) ‘Managing People during Economic Transition: The Development of
HR Practices in China’, Asia Pacific Journal of Human Resources, vol 38, no.2, 84-106.